FairPoint Communications 2009 Annual Report Download - page 154

Table of Contents
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Earnings per share has been computed in accordance with the Earnings Per Share Topic of the ASC. Basic earnings per share is computed by
dividing net income by the weighted average number of shares of common stock outstanding for the period. Except when the effect would be anti-
dilutive, the diluted earnings per share calculation calculated using the treasury stock method includes the impact of stock units, shares of non-vested
common stock and shares that could be issued under outstanding stock options. The weighted average number of common shares outstanding for all
periods presented have been restated to reflect the issuance of 53,760,623 shares to the stockholders of Spinco in connection with the Merger.
The following table provides a reconciliation of the common shares used for basic earnings per share and diluted earnings per share (in thousands):
As the Company incurred a loss for the years ended December 31, 2009 and 2008, all potentially dilutive securities are anti-dilutive and are,
therefore, excluded from the determination of diluted earnings per share.
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On March 31, 2008, FairPoint completed the acquisition of Spinco, pursuant to which Spinco merged with and into FairPoint, with FairPoint
continuing as the surviving corporation for legal purposes. In order to effect the Merger, the Company issued 53,760,623 shares of common stock, par
value $.01 per share, to Verizon stockholders for their interest in Spinco. At the time of the Merger, Legacy FairPoint had 35,264,945 shares of
common stock outstanding. Upon consummation of the Merger, the combined Company had 89,025,568 shares of common stock outstanding. At
December 31, 2009, there were 90,002,026 shares of common stock outstanding and 200,000,000 shares of common stock were authorized.
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Upon consummation of the Merger, the Company inherited several stock based compensation plans that had been adopted by Legacy FairPoint
prior to the Merger. As these plans were inherited on March 31, 2008, there is no impact reflected in the consolidated balance sheets or consolidated
statements of operations for periods prior to March 31, 2008.
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    
Weighted average number of common shares used for basic
earnings per share 89,271 80,443
Effect of potential dilutive shares — —
Weighted average number of common shares and potential dilutive
shares used for diluted earnings per share 89,271 80,443
Anti-dilutive shares excluded from the above reconciliation 2,750 1,069